Insurance is a contract between the insurer (usually an insurance company) and the insured (you) in which you promise to pay a regular premium (usually either annually or by way of monthly instalments) in return for the insurer's promise to indemnify (compensate) you for any loss or damage.

It is important to realise that insurance does not change the law or reduce your fault - it simply shifts the onus of paying for any liability from you to the insurer.

This section is not intended to be a guide to what insurance you should take out or with whom. It simply explains the legal implications of insurance. For practical advice on insurance and costs, contact your insurance agent or insurance broker.

To view a web page containing further information on this topic go to the Victorian Government's Business in Victoria website - www.business.vic.gov.au.